Plaid Cymru has called on the Welsh Government to act swiftly to establish a low interest focused Welsh business bank to support SMEs – after governments in Scotland and the Irish Republic outlined plans to create their own state-owned institutions.

Plaid Cymru first proposed the establishment of a Welsh business bank in 2009, and has called on the Welsh Government to listen to the pleas of the business sector to act on the growing funding gap.

An independent review carried out on behalf of the Welsh Government – the Access to Finance Review chaired by Professor Dylan Jones Evans – estimated that the funding gap in Wales amounts to at least £500m.

Plaid Cymru said its proposed bank would plug this gap by providing finance to businesses at competitive rates.

Prof Jones-Evans concluded that the Welsh Government owned investment bank Finance Wales could, and should, significantly reduce the interest rates it charges on debt to SMEs – without breach state aid rules or its ability to repay its loan to the European Investment Bank.

The Scottish Government has announced plans to establish a Business Development Bank to address the funding gap for Scottish businesses.

As part of its strategy to re-industrialise Scotland, published last week, the Scottish National Party, which governs Scotland, announced that it will be establishing a publicly-owned bank to plug the funding gap between the supply of finance by the commercial banking sector and demand for finance by Scottish businesses.

The Irish Government is also considering establishing a business bank as part of its banking inquiry.

The Party of Wales Shadow Economy Minister, Rhun ap Iorwerth, said:“Plaid Cymru has long-argued the case for the establishment of a Welsh business bank in order to give businesses the support they need.

“Business leaders tell us that one of the biggest problems they have is access to funding. The government’s own review found a huge funding gap in finance for business.

“Plaid Cymru has argued the case for a business bank as a publicly owned, not-for-profit bank that would give businesses access to finance at competitive rates. The Welsh Government has confirmed that it is considering the issue. But it’s high time we had some action.

“The Scottish Government has announced that it is looking at establishing a Scottish Business Development Bank and the Irish Government is investigating it as part of its banking enquiry. But the Welsh Government has shown a distinct lack of urgency in addressing the needs of businesses.

“Plaid Cymru’s Bank of Wales would give Welsh businesses exactly what they need to overcome the problems they face a difficult economic climate.”

The Welsh Government last month confirmed an independent advisory panel, chaired by Prof Jones-Evans, to examine the establishment of a Development Bank for Wales.

The panel will look not only look at how to ensure closer collaboration between business support and finance, but also identify new funding funds to support SMEs in Wales.